Shore towns' credit ratings drop post-Sandy

Stafford, Toms River see dip this week

Jun. 19, 2013

Written by

Michelle Gladden

@GladdenAPP

Jersey Shore towns working to rebuild after superstorm Sandy are taking a hit on their credit scores.

This week two heavily damaged communities — Stafford and Toms River — received word that their Moody’s Investors Service rating was downgraded.

In a Monday news release, the bond credit rating agency said it downgraded Stafford from one of its highest low-risk ratings to the top of its medium-risk category. The downgrade is based in part on the 47-square-mile community’s outstanding $51.5 million bond debt and a tax base that declined $200 million since superstorm Sandy.

“It (the rating) means absolutely nothing to us at this point,” Township Administrator James Moran said. “They are choosing to use the storm against us.”

Analysts Michelle Young Choi and Josellyn Yousef said in the report that “the downgrade reflects our expectation that the township’s financial flexibility will be limited in the near-term due to budgetary pressure associated with superstorm Sandy.” The rating “also incorporates anticipated declines in Stafford’s sizable tax base, above-average resident wealth levels, narrowing but still adequate liquidity and reserves, and high debt burden.”

Moody’s spokesman David Jacobson said Stafford is not the only Jersey Shore town to experience a drop in credit rating post-Sandy. In December, Moody’s dropped Seaside Heights’ rating and placed a negative outlook forecast on Belmar, Lavallette, Long Beach and Sea Bright but did not drop their ratings.

“Our job is to assess credit risk in the municipal marketplace,” Jacobson said.

In Stafford’s case, their average home value went from $300,000 to $237,000 after Sandy.

On June 10, Point Pleasant Beach received Moody’s negative forecast designation and on Tuesday Toms River’s rating also dipped.

“We’re not too concerned,” Toms River Township Administrator Paul Shives said on Tuesday. “Moody’s had incorrect information and we sent them a response today but the bottom line is that they kept our (stable) financial outlook the same.”

Jacobson said the downgrades may cost towns more when it comes time to issue more debt.

But Moran said they can rely on Standard and Poor’s more favorable ratings to stave off any financial impacts.

“We don’t even know if we are going to utilize Moody’s as our rating agency,” Stafford administrator Moran said. In the past, the municipality has used both Moody’s and Standard and Poor’s as its rating agency. Currently the municipality is rated by Standard and Poor’s as having a high probability of timely and complete debt payment.

Shives said Toms River used the more favorable S&P rating to acquire necessary bond debt following the storm.